Australia Offshore Oil Discovery
Workers of U.S. oil and gas company Apache Corp. drill a well. Apache says it made the biggest discovery of Australian offshore oil and gas in decades. Reuters/Terry Wade

An oil boom could be on tap for Australia’s northwest coast. U.S. energy firm Apache Corp. (NYSE:APA) says it has made what may be Australia’s largest oil discovery in decades, in a region that drillers had previously abandoned after coming up empty.

The oil field off Western Australia’s Canning Basin potentially holds up to 300 million barrels of oil, according to Apache, though only a slice of those deposits would be recoverable. The finding was made by the Phoenix South-1 well, which was initially exploring for gas when it stumbled upon the vast oil patch.

The country needs new oil sources to replace its quickly diminishing reserves from existing fields, the Wall Street Journal noted. Australian oil production in 2013 dropped by 17 percent to 416,000 – a four-decade low – as conventional fields dried up, according to BP PLC (NYSE:BP).

The possible economic gains from the find come at a good time for the state of Western Australia, which has recently suffered from the bursting of its iron ore export bubble. According to the Sydney Morning Herald, benchmark iron ore prices are 31 percent off their Jan. 1 level, and that decline has been aggravated by an almost 5 percent rise in the Australian dollar this year.

Iron ore, one of the world's most fundamental commodities, sold off sharply beginning in 2013 after several months of rising prices prompted producers to boost output at the same time that demand in China waned.

Furthermore, the IBTimes UK reported in June that staff at one of the world's largest mining groups were bracing for around 3,000 job cuts as BHP Billiton (NYSE:BBL) is pegged to slash headcount to cut costs in its iron ore business.

Australia's coal industry has also taken a big hit, losing more than 12,000 jobs since 2012, amid rising competition and volatile commodities prices.

Apache’s drilling results so far “point to a commercial discovery,” Thomas Voytovich, a senior executive at the company’s international arm, told reporters. “If these results are borne out by further appraisal drilling, Phoenix South may represent a new oil province for Australia.”

Boosting the company’s optimism is the oil’s high-grade “light” quality, which is easier to produce than heavier blends and attracts premium prices, analysts said, according to the Sydney Morning Herald.

Peter Strachan, a principal at StockAnalysis, told the paper the discovery could hold up to 60 million barrels of recoverable oil. He estimated the field would cost about $1 billion to develop using a floating production vessel, which could potentially produce up to 25,000 barrels per day.

The full significance of the Phoenix South discovery, however, likely won’t be known for decades, Simon Andrew, an energy analyst at Perth-based broker Hartleys, told the Wall Street Journal.